SEC Plan to Simplify Offering Documents Reflects Use of Language as Tool of DenialThe Nov. 10, 1997, issue of our sister publication, Going Public: The IPO Reporter, offers an intriguing analysis of a proposed Securities and Exchange Commission rule that would require securities offering documents to be written in plain English. As the story relates, the proposal is the subject of considerable debate. If the rule goes through, prospectuses and similar documents would be stripped of hard-to-read legal pronouncements some of which is referred to as boilerplate and replaced by simple English that is easier for investors to understand. The proposal carries the concept of full disclosure under U.S. securities laws to a new level. The question that prompted SEC action is whether there truly is full disclosure if the reader can’t make out the language. While investors and communicators may be foursquare behind the change, it is not universally beloved. The resistors primarily are from the legal and investment banking worlds who are the principal sculptors of the present formats. No, they told the IPO Reporter, they are not opposed to the concept or the goal of plain-English documents. They just don’t want to be officially told that they have to write that way. Proponents of the rule change say that attitude is the surest way to preserve the status quo. Without a directive, they say, the reluctant will stall as long as they can, consistently mouthing good intentions but always finding some reason to stick with jargon that they seem most comfortable with. Securities offerings occupy just one corner of the business linguistics battlefield. Controversies over legal contrivances or fine print have erupted and often been litigated or subject to governmental rulemaking over insurance policies, sales agreements, and warranty contracts among other areas. As yet, there hasn’t been much of a flash point over language in mergers and acquisitions documents and reports. But give it time. For reasons that are hard to fathom in this day and age, many dealmakers, operating companies, lawyers, and even some communicators have an aversion to calling a merger a merger or an acquisition an acquisition. Press releases and even some official filings sidestep the two operative and simplest words, using language to craft an unusual state of denial. One company often doesn’t acquire another or two companies often don’t merge, according to the paper trail, although that is exactly what happens. Instead, we are told, the companies have agreed to form a “strategic alliance.” Or they are entering into a “strategic partnership.” The companies also may join forces, agree to common management, pool resources, share goals and values, form a team, etc. Selling owners may be seeking career changes or executing a shift in their company’s direction. Anything but merge and acquire, although the reader that sticks around long enough to plow through the murky euphemisms eventually comes upon them. How many do? And how many spot the code words up front and don’t bother to go on? Lawyers and investment bankers may not be entirely responsible for perpetuating esoterica in m&a, although they usually appear to be simpatico with the linguistic stretches offered for public consumption. The companies themselves have some problems with simply stating that a merger or acquisition is taking place. Buyer and seller fears a change of ownership will upset the customer base, the work force, or some other constituency and try to camouflage it. Or there may be concern that a simple statement of fact will accelerate the arrival of the tax man or some other regulator. And some publicity-shy parties to a deal naively think they can mask what happened by talking around it. In the end, they are denying the inevitable.